I'm also on the 360 and I've never had much trouble with the dragon form. To circle an enemy all you have to do is lock onto them with LT and push the L stick left or right, though I don't really do that too often. No matter what area I'm in I always go after lightning and wizard towers first as they're the most dangerous to you. Then just mop up what's left. Level Fire Breath and Fire Ball first as their your main actions. If your stuck in the first dragon area level FB as it will allow you to take out the stationary targets the fastest. If you did all the side quests up to that point then you should have Bone Dragon tail, head, and claw armor. These will give you polymorph, dragon spirit and an attack boost. Attack everything systematically, take out ballista on the same island floor by floor. As long as you keep moving nothing should hit you often. Just circle each floor of an island flaming ballista until you get to the top, then destroy the nest tower and use fire ball on nearby fliers. Then do the same for the other island. When taking on tough enemies that can heal themselves use polymorph on them. Dragon Commanders can be morphed and stripped of their healing, then just flame them until they die.
